BAB again starts collecting money from banks
Bangladesh Association of Bankers (BAB), an organisation of private banks, has started collecting money from banks as it used to do during the regime of Bangladesh Awami League.
Recently, the association sent a letter to banks asking them to contribute specific amounts in order to provide blankets to the Chief Adviser’s Relief Fund. The association also sent letters to the banks instructing them to donate a total of Tk 40 million to the Dhaka International Marathon.
BAB’s initiatives, however, left the bank chiefs surprised. Chief executive officers of six banks confirmed receiving the letters to Prothom Alo.
Former BAB chairman Nazrul Islam Mazumder used to collect money from banks on various issues during the tenure of the Awami League governments, and bank owners handed the money to the ousted Prime Minister Sheikh Hasina. In return, banks allegedly received relaxation from various conditions of the Bank Company Act and other guidelines. As a result, the board of BAB was changed following the fall of the Awami League government.
Former chief economist at Bangladesh Bank, Mustafa K Mujeri told Prothom Alo, “Previously, BAB sank the banking sector by collecting money en masse. If the new committee starts doing the same, this move must be destroyed at the very beginning. No game must be played over people’s deposits. All banks must spend money on the sectors related to corporate social responsibility. The BAB is nobody to lay a hand on this money.”
A lone chairman for 17 years
The former chairman of EXIM Bank, Nazrul Islam Mazumder was the chairman of BAB for 17 years since 2008. He became known as a very close businessperson to former Prime Minister Sheikh Hasina during that time.
Following the 5 August political changeover, Bangladesh Bank removed Nazrul Islam Mazumder from the posts of director and chairman of the EXIM Bank, thus, he lost the BAB chairmanship.
Two vice chairmen of Nazrul Islam Mazumder-led BAB committee also lost positions from their respective banks; there were Al-Arafah Islami Bank former chairman Abdus Samad and United Commercial Bank (UCB) vice chairman Anisuzzman Chowdhury.
Before the political changeover, the BAB lastly organised the ‘Sheikh Hasina Inter-Bank Football Tournament’ and also collected money.
Bankers said the BAB led by Nazrul Islam Mazumder collected several thousand takas on various issues during the past 15 years. Demands have arisen now to run audits on the use of these funds.
Banks provided about Tk 30 billion to the Prime Minister’s Fund. A central bank instruction in 2022 said that banks and financial institutions would donate 5 per cent of their CSR (corporate social responsibility) funds to the Prime Minister’s Education Assistance Trust.
Sources said the lowest amount for the Dhaka marathon has been fixed at Tk 500,000. Wishing anonymity, a leading private bank’s managing director told Prothom Alo he gave about Tk 2.5 billion to the BAB over the past 15 years. After the change in the government, he also bought blankets and gave those to the people concerned following the receipt of the letter.
The MD further said that he received another letter with instructions to give money to the marathon, and the money will be provided this week. The collection of money in such a manner is disrupting the bank’s CSR activities.
New committee, old ways
BAB formed an ad-hoc committee in September last year and they have been re-elected this month. Dhaka Bank chairman Abdul Hai Sarker became the chairman of BAB while First Security Islami Bank chairman Mohammad Abdul Mannan and Bank Asia chairman Romo Rouf Chowdhury became vice chairmen.
According to the BAB website, it is an advisory service organisation for private-sector commercial Banks. The members of the Executive Committee, both collectively and individually, take up the issues with the Ministry of Finance, the Governor, Bangladesh Bank, International Agencies like the World Bank, the IMF and so on, and other appropriate authorities for making realistic solutions in order to tide over the difficulties faced by the banking sector.
Established under the Companies Act- 1913, BAB started its activities in 1993 with nine private commercial banks which increased to 38 to date. The association is run on its members’ money.
Wishing anonymity, a bank chairman who is also on the BAB committee, told Prothom Alo the BAB could not shun its old practices that much.
Various banks alleged the BAB new committee launched no audit on the money collected earlier, rather, they continued the old practices. Lastly, the association sought money from banks for the blankets and the marathon event. In a letter sent to all banks on 15 December, the BAB fixed the number of blankets specifying that the weight of the blanket will be no less than 1.2 kg.
In another letter to the banks on 5 January, the BAB chairman said the Dhaka International Marathon will be held on 7 February and a donation of Tk 40 million will be made to this event. The BAB fixed the amount for all banks and asked them to deposit it by 5 January.
The marathon organising committee asked for a sponsor of a maximum of Tk 20 million in their letter to the BAB. So, questions arose as to why the BAB is raising Tk 40 million.
Chairmen of two private banks told Prothom Alo on condition of anonymity that money was collected from banks on any issues regardless of winter, summer, storm or rain. Banks’ CSR funds effectively became empty. The BAB is now walking the same path. As a result, banks cannot actually start their CSR activities.
BAB leaders could not be reached over mobile phone for comment.
The BAB was not seen playing any significant role other than creating pressure on the government to set banks’ lending rate at 9 per cent, amend the Bank Company Act to extend the tenure of the bank directors and relax various loan guidelines.
Muinul Islam, a former professor of economics at the University of Chittagong, told Prothom Alo the BAB must stop collecting money as they become stronger with money and even change the law. That is why banking sectors face such a dire situation. CRS funds must be used in the sectors as stated in the laws and banks can use this fund on their own.